Article by Michael Gorton, CEO, Principal Solar
Solar companies are looking forward to a banner year, with an expectation of long-term growth and positive returns. The question is this: are they optimizing this opportunity with a well-rounded message designed to unite Democrats and Republicans in support of solar utility?
Expanded interest in this energy sector hinges on positive messaging that emphasizes the environment, global warming and the dependency of fossil and nuclear plants on huge amounts of cooling water – and rightly so. According to the United States Geologic Survey (USGS), water use for thermoelectric power generation in 2010 accounted for over 40 percent of total withdrawals.
To further round out the solar picture, however, solar companies should also emphasize the importance of political parties working together to support solar utility as a way to diversify the power grid, and extend the nation’s natural gas resources.
Uniting political parties
Over the past few decades, solar has been largely supported by Democrats. But this scenario is changing. In defense of the traditional Republican and conservative positions, as recently as 2009, baseload natural gas power plants were constructed for well under $1.00 per watt, while all-in cost of utility-scale solar PV was more than $6.00. Today, the story is very different and quite compelling. PV solar cell prices have dropped by a factor of 100 over the last 35 years — and by a factor of 10 over the last 15 years. The 2015 Q1 average solar cell price was $0.31 per watt and the average solar module price was $0.72 per watt.[i] No credible analyst could have predicted this trend.
With the growth of solar-utility, market forces will encourage competitiveness, generating more opportunities for business growth among mid-sized businesses, job growth and a stronger economy – important points for both political parties. Conservatives can also appreciate that the end result of national support for solar means greater grid stability through operational integration, rather than regulation.
In terms of Liberal platform values, solar generates clean and sustainable electricity without particulates, toxic pollution or global warming gasses. This means reduction in both emissions and water usage. While abundant, coal as a primary generating source produces significant pollution and is one of the world’s biggest sources of carbon dioxide emissions. The Environmental Protection Agency (EPA) and much of the American public are opposed to adding new coal generation to the utility infrastructure.
Extending natural gas resources
Solar manufacturing processes are improving, making modules more affordable, even as balance-of-system costs are dropping. A few years ago, the cost to build a solar facility was more than $6.00 per watt. Now, that cost is around $1.50 per watt for utility-scale solar. Over the next five years, expectations are that the installed cost of a solar facility will be under $1.00 per watt.
Another important point: Solar only uses water for rinsing dust off the PV panels, while steam-motivated fossil and nuclear plants require cooling water and artificial holding ponds. Furthermore, solar operation and maintenance costs are low, with no fuel costs and no variability in fuel cost. Solar is also highly scalable: 20 MW are relatively small, and easily scale to hundreds of megawatts in a straightforward and cost-effective manner.
Right now, the U.S. has abundant natural gas resources. It is cheap, relatively clean, and an excellent fuel for electric power generation. Still, over-reliance on abundant natural gas is risky. Most experts believe it would not be prudent to rely upon a single primary fuel for electric power generation. Turning solar into a power partner with natural gas is an obvious fit that lends much-needed diversity to the power grid.
Renewable energy sources represent the future. In its forecast of the use and consumption of energy worldwide, the International Energy Agency concluded:[ii]
- Demand for efficiency and regulations promoting efficiency is growing.
- The share of non-fossil fuels in the overall energy mix will rise from 19 percent in 2015 to 25 percent by 2040.
- $0.60 cents of every dollar invested in energy infrastructure in 2040 will be invested in renewables.
- Renewable prices will go down, and fossil prices will rise.
- Natural gas, the cleanest fossil fuel, is the only one on the rise globally with consumption rising by nearly 50 percent in 2014.
- Oil will return to $80.00 a barrel by 2020, and oil demand will rise to 103.5 million barrels per day by 2040.
- Coal’s overall contribution to the world’s energy demand will drop from 41 to 30 percent.
Many people in the U.S. are eager to regain the strong position as an energy-independent nation. According to the Energy Information Administration (EIA), there are approximately 2,276 trillion cubic feet (Tcf) of recoverable natural gas in the U.S. In 2013, the rate of consumption was 27 Tcf per year, which means we have just over 84 years of supply. If coal plants begin closing and are replaced with natural gas, that consumption rate will increase, and the 84-year estimated reserve will decrease.[iii]
Making hay while the sun shines
Solar as a power partner to natural gas makes sense, given that solar only produces when the sun is shining, and power consumption is highest when the sun is producing the highest insolation. In fact, solar can readily become what is known as a peak-load generating facility. Peak-power generation is currently being handled by power plants that have the ability to turn on quickly, and run for short demand periods (known as peakers or gas peakers). They tend to be less efficient than combined cycle power plants, and produce very expensive electricity.
With solar costs on the decline, this clean, renewable energy can generate cost-effective peak generation energy. This is important given that in 2010 the U.S. electricity generation was 4,361 billion kWh gross, with annual electricity demand projected to increase to 5,000 billion kWh by 2030.[iv]
This country has invested in solar technology, and that investment is beginning to pay off. As the rewards accrue, and as solar becomes an integral and important part of the nation’s energy infrastructure, this renewable energy source will support natural gas by lowering the amount the country burns each year — thereby increasing the lifetime of that non-renewable resource.
Michael Gorton, CEO, Principal Solar, Inc., is a serial entrepreneur who draws on his extensive business expertise, scientific education and engineering training to serve as a strong voice and proponent of the solar power industry.
Citations:
[i] Solar Central; What Does Regular Electricity Cost?; http://solarcellcentral.com/cost_page.html; accessed December 18, 2015.
[ii] Kanellos, Michael; Despite Lavish Subsidies, Fossil Fuel Loses In Latest IEA Forecast; Forbes; Nov. 10, 2015; http://www.forbes.com/sites/michaelkanellos/2015/11/10/despite-lavish-subsidies-fossil-fuel-loses-in-latest-iea-forecast/3/; accessed December 18, 2015.
[iii] Energy Information Administration; How much natural gas does the United States have, and how long will it last?; http://www.eia.gov/tools/faqs/faq.cfm?id=58&t=8; accessed December 18, 2015.
[iv] World Nuclear Organization; Nuclear Power in the USA; http://www.world-nuclear.org/info/inf41.html; accessed December 18, 2015.